This article examines how economic shocks affect individual
well-being in developing countries. Using the case of a sudden
and unanticipated currency devaluation in Botswana as a
quasi-experiment, the article examines how this monetary
shock affects individuals’ evaluations of well-being. This is
done by using microlevel survey data, which—incidentally—
were collected in the days surrounding the devaluation.
The chance occurrence of the devaluation during the time
of the survey enables us to use pretreatment respondents,
surveyed before the devaluation, as approximate counterfactuals
for post-treatment respondents, surveyed after
the devaluation. Estimates show that the devaluation had
a large and significantly negative effect on individuals’
evaluations of subjective well-being. These results suggest
that macroeconomic shocks, such as unanticipated currency
devaluations, may have significant short-term costs
in the form of reductions in people’s sense of well-being.

This paper examines how economic shocks affect individual well-being in developing
countries. Using the case of a sudden and unanticipated currency devaluation in
Botswana as a quasi-experiment, we examine how this monetary shock affects
individuals’ evaluations of well-being. We do so by using micro-level survey data,
which – incidentally – was collected in the days surrounding the devaluation. The
chance occurrence of the devaluation during the time of the survey enables us to use
pre-treatment respondents, surveyed before the devaluation, as approximate
counterfactuals for post-treatment respondents, surveyed after the devaluation. Our
estimates show that the devaluation had a large and significantly negative effect on
individuals’ evaluations of subjective well-being. These results suggest that
macroeconomic shocks, such as unanticipated currency devaluations, may have
significant short-term costs in the form of reductions in people’s sense of well-being.